Audit proof your small business before tax time
Audit proofing your business is a product of your attitude towards good corporate governance. How you approach record keeping for your business, and your understanding of the laws that impact you on a daily basis, are fundamental to the concept of audit proofing your business.
Exceptional record keeping
From your first day in business you should use a professional online accounting software package, like MYOB AccountRight. This decision is one of the most important you will make. Professional accounting software will enable you to keep track of your cash position, your trading performance and of course assist you with the calculation of your GST and PAYG liabilities.
The first thing the Australian Taxation Office will ask you in the event you have a Business Records Audit is, “How do account for your income and expenses?” It is important to engage professionals when it comes to the maintenance of your records, and dealing with statutory record lodgements like your Income Tax Return, Payroll Tax returns and ASIC forms.
If you are unsure about how to go about your taxation record keeping obligations, or simply knowing what you can and can’t claim, seek the advice from a professional!
Motor vehicle log book
Not knowing that you should keep a log book for business Motor Vehicle use for a 12 week period each five years may cause you to be exposed to the risk of a disallowed claim. The more supporting information that you can maintain and record in relation to your business claims will allow you the comfort of sleeping at night.
Home office records
If you’re using a home office and making a claim based on the fact that the area is dedicated to business activities, and not easily converted to private use, take a photo to support the fact. Remember that as your business grows you may move to an office outside the home, at which point the once used home office may now have become a guest bedroom. Too late to take a photo then!
Travel records by the hour
When travelling away from home for 5 nights or more you need to keep a diary of your activities by the hour. This enables you to determine the proportion of your travel costs that are related to business activities.
Remembering too that overseas business activities must be substantial ie., if you work in the arts, visiting galleries and museums and arguing that this is professional development will not fly. Everyone visits galleries and museums when they travel overseas. You must attend a work/business related conference or undertake significant business meetings and dealings to support a claim for airfares and related accommodation and meal costs.
Finally, consider the entity that you operate your business from, is it time to move to a company structure for limited liability protection? Good luck with your businesses, just remember that the systems you put in place from day one will protect you and your business for the long haul.
Make a tax change for the better this end of financial year with MYOB AccountRight, it’s the power to manage business, your way. For further information or assistance with setting up or upgrading please contact Keeping Company on 1300 533 787.